Antitrust Sanctions

In
this article, we first discuss traditional deterrence theory as applied to
optimal criminal antitrust penalties. Then we evaluate both the U.S. and EU
experience with ever-increasing corporate fines and the available empirical
evidence on the deterrent value of cartel sanctions. In the next part we turn
to our claim that the conventional wisdom of ever-increasing corporate fines to
solve the problem of under-deterrence is misguided. The determination of the
optimal sanction for price-fixing should be guided by two principles: (1) the
total sanction must be great enough, but no greater than necessary, to take the
profit out of price-fixing; and (2) the individuals responsible for the
price-fixing should be given a sufficient disincentive to discourage them from
engaging in the activity. We propose altering the distribution of criminal
sanctions for corporations and the individuals who fix prices on their behalf,
and introducing sanctions for negligent officers and directors consistent with
our two fundamental principles. Finally, we discuss the experience with
debarment as a sanction in other contexts, and how it might operate in the
context of U.S. antitrust enforcement.